Lawsuit Accuses Scrap Companies of Price Fixing

Plaintiffs' attorneys filed briefs in federal court earlier this week arguing that a price-fixing lawsuit against DeMilta Iron and Metal of Willoughby, Ohio, and about a dozen other companies should be declared a class action.

The suit, originally filed in May 2002, alleges defendants conspired to drive down prices they paid plaintiffs for scrap metal over a nearly eight-year period ending in March 2000.

DeMilta and four other defendants were added to the suit last month.

Cleveland U.S. District Court Judge Kathleen O'Malley will decide whether to grant class-action status, which would allow any customer of the defendants to seek damages.

According to court documents, the plaintiffs, which include Euclid-based welding equipment manufacturer Lincoln Electric Co., claim DeMilta and about a dozen other buyers of scrap metal colluded through a series of secret meetings and conversations to drive prices down.

The complaint also said the "pre-arranged" winning bidder would compensate other conspirators by agreeing to sell them scrap at a discount.

Along with Lincoln Electric, plaintiffs include: Profile Grinding Inc., Brooklyn Heights; Bic Manufacturing Inc., Euclid; and Talan Products Inc., Cleveland.

But documents filed by the plaintiffs say the number of scrap sellers who could have been impacted will be known once defendants make their records available, and that figure could be in the hundreds.

They are seeking triple damages, attorney fees and interest for a conspiracy that allegedly affected "millions of dollars" of sales of scrap.

Frank DeMilta, owner of DeMilta Iron and Metal, did not return a call seeking comment Thursday.

The attorney for Frank MeMilta, owner of DeMilta Iron & Metal, William D. Beyer, said it appeared DeMilta had not done business with any of the plaintiffs and he could therefore only speculate as to why his client's company had been brought into the suit.

He "emphatically" denied DeMilta was involved in any conspiracy and said the small Willoughby company colluding with the other defendants would be comparable to huge tobacco companies fixing prices with a corner cigarette shop.

Plaintiffs attorney Edmund W. Searby said part of the basis for the original lawsuit came from a federal antitrust investigation.

The Justice Department has been conducting a criminal investigation of the scrap industry in Northeast Ohio since 1999.

As a result of that investigation, four scrap dealers named in the civil suit have pleaded guilty to antitrust violations and paid up to $1 million in fines and restitution to settle their cases, according to the Antitrust Division of the Justice Department. (Northern Ohio) News Herald)